If you are in debt and struggling to find a solution, chances are you have at least thought of bankruptcy. Perhaps it has been a fleeting thought, or maybe it has been a consistent subject of your consideration. No matter where you currently stand on the issue, you could likely benefit from better understanding what exactly bankruptcy involves. Most people have at least some misconceptions, and these four myths are ones that can easily be dispelled.
Bankruptcy will ruin your credit
Many people rule out filing for bankruptcy because they assume that it will forever damage their credit. While it is true that filing can have a negative impact on your credit report and score, it is worth considering whether this impact is worse than what will be incurred if your debt continues to accumulate. In many cases, bankruptcy will not be as damaging to your credit as the alternatives.
It is rare for people to file for bankruptcy
Considering bankruptcy can make you feel isolated because there is a common misconception that it is rare. On the contrary, there are typically close to one million bankruptcies filed every year by businesses and individuals. This false sense of isolation can often dissuade people from considering it as an option, but it is not just common; it is often beneficial. Realizing this may help you more clearly consider its pros and cons without the distortion caused by misconception.
Bankruptcy will force you to liquidate assets
People also commonly and wrongly assume that bankruptcy will force them to liquidate their assets. The terms of your debt repayment will depend on whether you file for Chapter 7, 11 or 13, as well as your individual finances, but you can often retain your assets and savings when you file. This is typically negotiated in the terms of restructure.
It is difficult to qualify for bankruptcy
One of the final and most problematic myths about bankruptcy is the idea that it is difficult to file. Though it may be unwise to do so on your own, it is not difficult at all when you have legal guidance. Filing for bankruptcy is a clearly outlined process that can provide you with much-needed relief from debts that have become overwhelming.
There are many reasons you may consider filing for bankruptcy. If you think it is the best option for your financial situation, contacting an attorney can help you better understand that process and path that lies ahead.